India's pellet production rises over 10% y-o-y in Apr-Sep'24. Will growth trend continue?
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*Pellet output reaches over 52 mnt in H1FY'25
*Odisha emerges as top producing state
*Integrated steel mills raising consumption in major way
Morning Brief: Production of iron ore pellets in India during April-September (H1) of the current fiscal year (FY'25) stood at over 52 million tonnes (mnt), an increase of 11% y-o-y compared with 47.2 mnt in H1FY'24.
As per BigMint data, India's pellet production capacity, which stood at around 144 mnt in FY'24, is slated to increase to 170 mnt by the end of FY'25.
State-wise production
Odisha was the top pellet-producing state in the country in H1FY'25, with production increasing by over 16% to 19.2 mnt compared with 16.5 mnt in the year-ago period.
The other major producing states were Karnataka at 8.5 mnt and Jharkhand at 5.5 mnt.
Top producers
JSW Steel was the top producer of pellets during the period, with production reaching 12.9 mnt during the period under review, an increase of around 7% y-o-y.
Similarly, AM/NS India raised production by around 7% y-o-y during the period under review, while JSPL recorded production growth of around 17% y-o-y, as per data.
Why pellet output surged?
* India's crude steel production ticked up to 72.65 mnt in H1FY'25 as against 69.89 mnt in H1FY'24, an increase of around 4% y-o-y.
* Sharp growth in DRI production capacity is propelling pellet output. DRI production in the period under review stood at around 26.48 mnt, with the share of pellet-based DRI pegged at around 60%. Usage of pellets in rotary kilns leads to considerable energy efficiency compared with unprocessed iron ore mainly due to generation of fines and accretion in the kiln. Total capacity of DRI in FY'25 is estimated at around 65 mnt.
* Higher pellet usage by the integrated mills is a major driver of the growth in domestic production. With a view to maximising energy efficiency, the blast furnace-based producers of iron are revving up pellet output from a level of 20-25% previously to a level of around 60% in the charge mix. Redesigned injection systems in the state-of-the-art BFs (among the new installations) have higher pellet intake capacity.
* The advantages of pellets include environmental benefits compared with sinter, quicker delivery cycle, as these are transported via road unlike iron ore which is dependent on rail rakes, which are often in shortage, as well as growing shortage of high-grade iron ore lump.
* Domestic iron ore production edged up by 10% y-o-y to 140 mnt in H1FY'25, thus facilitating higher pellet output.
Outlook
BigMint expects both production and capacities to increase in the medium to long term, since mills are increasingly opting for backward integration. Plus, the stress on greener steelmaking methods is gaining momentum which should encourage pellet usage.